UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from ________________ to ________________
Commission file number 000-28279
PLANETGOOD TECHNOLOGIES, INC. (d/b/a BrowseSafe.com)
(Exact name of small business issuer as specified in its charter)
Nevada 35-2090110
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7202 East 87th Street, Indianapolis, Indiana 46256
(Address of principal executive offices)
(317) 806-3000
(Issuer's telephone number)
BrowseSafe.com, Inc.
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Outstanding as of November 6, 2000: 24,193,826 shares of common stock, $0.001
par value per share; no shares of preferred stock, $0.001 par value per share.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
PART I - FINANCIAL INFORMATION
-------------------------------------------------------------------------------
Item 1. Financial Statements.
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(d/b/a BrowseSafe.com)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
September 30, December 31,
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash $ 62,825 $ 6,475
Prepaid consulting expense 888,636 177,344
Prepaid promotional supplies 321,429
Prepaid expenses and other 106,908 54,950
----------- -----------
Total Current Assets 1,379,798 238,769
----------- -----------
OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net of
accumulated depreciation and amortization of $72,027
at September 30, 2000 and $11,395 at December 31, 1999 398,442 93,281
----------- -----------
OTHER ASSETS
Web design and computer software costs, net of accumulated
amortization of $94,741 at September 30, 2000 and
$50,430 at December 31, 1999 67,344 50,430
Product development costs 97,316 78,950
Deposits 31,622 24,034
----------- -----------
Total Other Assets 196,282 153,414
----------- -----------
TOTAL ASSETS $ 1,974,522 $ 485,464
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank line of credit $ 198,944
Accounts payable $ 572,660 348,442
Accrued payroll and related expenses 130,679 127,875
Payable to related party 105,847
Accrued stock issuance 337,500
Deferred revenue 5,720
Current maturities of long-term debt 54,208 34,314
Note payable - 176,389
----------- -----------
Total Current Liabilities 763,267 1,329,311
LONG-TERM DEBT 58,165 29,310
CONTINGENCIES - -
----------- -----------
Total Liabilities 821,432 1,358,621
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value; 85,000,000 shares
authorized at September 30, 2000 and 25,000,000 shares
authorized at December 31, 1999, 24,193,826 shares
issued and outstanding at September 30, 2000 and
19,075,346 shares issued and 17,575,346 shares
outstanding at December 31, 1999 24,194 17,575
Additional paid-in capital 8,888,671 793,899
Warrants outstanding 1,458,281 71,094
Deficit accumulated during development stage (9,218,056) (1,755,725)
----------- -----------
Total Stockholders' Equity (Deficit) 1,153,090 (873,157)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,974,522 $ 485,464
=========== ===========
</TABLE>
Unaudited Interim Financial Statements
2
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(d/b/a BrowseSafe.com)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Period from
February 10,
1998
(Inception)
Three Months Ended Nine Months Ended to
September 30, September 30, September 30,
2000 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C>
REVENUES $ 46,447 $ - $ 48,225 $ - $ 48,225
MARKETING, GENERAL AND ADMINISTRATIVE
Product development and Internet expenses 10,919 5,150 13,131 6,595 132,543
Marketing and advertising 255,701 16,765 265,969 23,168 569,777
Payroll expenses 547,119 47,176 1,130,636 215,015 1,628,718
Legal and professional 141,552 17,859 636,894 47,171 835,245
Non-cash consulting services-Note 10 1,493,189 4,977,058 5,008,308
Hardware lease expense 26,567 24,216 60,555 80,861 137,438
Contract termination 200,000 200,000 200,000
Depreciation and amortization 52,087 15,025 104,943 43,313 166,770
Interest expense 3,936 1,832 15,888 9,429 109,128
Commissions 14,961 14,961 14,961
Software and fulfillment expenses 17,284 17,877 17,877
Other general and administrative expenses 105,212 64,215 272,644 76,644 445,516
------------ ------------ ------------ ------------ ------------
Total General and Administrative 2,668,527 392,238 7,510,556 702,196 9,266,281
------------ ------------ ------------ ------------ ------------
Net Loss before Income Taxes (2,622,080) (392,238) (7,462,331) (702,196) (9,218,056)
INCOME TAXES - - - - -
------------ ------------ ------------ ------------ ------------
NET LOSS $ (2,622,080) $ (392,238) $ (7,462,331) $ (702,196) $ (9,218,056)
============ ============ ============ ============ ============
NET LOSS PER COMMON SHARE $ 0.1107 $ 0.0245 $ 0.3283 $ 0.0528 $ 0.5931
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 23,678,217 16,038,000 22,729,002 13,289,097 15,543,321
============ ============ ============ ============ ============
</TABLE>
Unaudited Interim Financial Statements
3
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(d/b/a BrowseSafe.com)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Period from February 10, 1998 (date of inception) to September 30, 2000
<TABLE>
<CAPTION>
Additional
Members' Common Paid-in Warrants Accumulated
Deficit Stock Capital Outstanding Deficit Total
<S> <C> <C> <C> <C> <C> <C>
Capital contributions from members of BrowseSafe LLC at
inception on February 10, 1998 $ 190,000 $ 190,000
Net loss (541,420) (541,420)
Reclassification of members' deficit to reflect contribution
of BrowseSafe LLC assets and liabilities to BrowseSafe
Technology, Inc. in exchange for 11,200,000 shares of
BrowseSafe Technology, Inc. common stock 351,420 $ 11,200 $ 178,800 $ (541,420) -
---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 1998 - 11,200 178,800 (541,420) (351,420)
Issuance of 2,738,000 shares of common stock 2,738 24,645 27,383
Issuance of 2,100,000 shares of common stock in connection
with Motioncast transaction 2,100 372,720 374,820
500,000 shares issued and held in escrow as collateral for
liability -
1,000,000 shares issued and held in escrow pursuant to -
consulting agreement
Issuance of warrants to purchase 350,000 shares of common
stock for services $ 71,094 71,094
Interest expense attributable to the beneficial conversion
feature of debentures 66,667 66,667
Conversion of debentures to 1,537,000 shares of common stock 1,537 151,067 152,604
Net loss - - - - (1,214,305) (1,214,305)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 1999 - 17,575 793,899 71,094 (1,755,725) (873,157)
</TABLE>
4
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY (CONTINUED)
(d/b/a BrowseSafe.com)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Period from February 10, 1998 (date of inception) to September 30, 2000
<TABLE>
<CAPTION>
Additional
Members' Common Paid-in Warrants Accumulated
Deficit Stock Capital Outstanding Deficit Total
<S> <C> <C> <C> <C> <C> <C>
Issuance of 128,571 shares of common stock 129 44,871 45,000
Issuance of 6,036,000 shares of common stock and warrants to
purchase 550,000 shares of common stock 6,036 2,556,996 256,968 2,820,000
Issuance of 975,000 shares of common stock and warrants to
purchase 300,000 shares of common stock for services 975 3,521,525 935,000 4,457,500
Issuance of 500,000 shares of common stock for repayment of
contract termination liability 500 199,500 200,000
Issuance of 250,000 shares of common stock upon exercise of
warrants 250 205,531 (50,781) 155,000
Issuance of 360,000 shares of common stock and warrants to
purchase 570,000 shares of common stock related to Swartz
financing transaction 360 (266,673) 266,313 -
Net loss for the quarter ended March 31, 2000 - - - - (2,765,626) (2,765,626)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT MARCH 31, 2000 (UNAUDITED) - 25,825 7,055,649 1,478,594 (4,521,351) 4,038,717
Issuance of 335,909 shares of common stock for services 336 624,267 624,603
Issuance of 100,000 shares of common stock upon exercise of
warrants 100 160,213 (20,313) 140,000
Cancellation of 2,738,000 shares of common stock (2,738) 2,738 -
Net loss for the quarter ended June 30, 2000 - - - - (2,074,625) (2,074,625)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT JUNE 30, 2000 (UNAUDITED) - 23,523 7,842,867 1,458,281 (6,595,976) 2,728,695
Issuance of 300,000 shares of common stock 300 299,700 300,000
Issuance of 371,000 shares of common stock for services 371 746,104 746,475
Net loss for the quarter ended September 30, 2000 - - - - (2,622,080) (2,622,080)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT SEPTEMBER 30, 2000 (UNAUDITED) $ - $ 24,194 $8,888,671 $1,458,281 $(9,218,056) $1,153,090
========== ========== ========== ========== =========== ==========
</TABLE>
Unaudited Interim Financial Statements
5
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(d/b/a BrowseSafe.com)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Period from
February 10,
1998
(Inception)
Nine Months to
Ended September 30, September 30,
2000 1999 2000
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(7,462,331) $ (702,196) $(9,218,056)
Adjustments to reconcile net loss to net cash
(used) by operating activities:
Depreciation and amortization 104,943 43,313 166,769
Noncash consulting services 4,977,058 5,011,036
Noncash settlement 200,000
Interest expense attributable to beneficial
conversion feature of debentures 66,667
(Increase) decrease in certain current assets:
Inventories 6,889
Prepaid promotional supplies (321,429) (321,429)
Prepaid expenses and other (51,958) (194) (106,908)
Increase (decrease) in certain current liabilities:
Accounts payable 226,946 (52,054) 572,660
Accrued payroll and related expenses 2,804 - 130,679
Payable to related party (105,847) -
Contract termination payable 200,000
Deferred revenue 5,720 - 30,819
----------- ----------- -----------
Net Cash (Used) by Operating Activities (2,624,094) (504,242) (3,467,763)
----------- ----------- -----------
INVESTING ACTIVITIES
Cash purchases of office equipment and leasehold
improvements (365,793) (6,510) (396,325)
Increase in deposits (7,588) (31,622)
Cash paid for software developed for internal use (61,225) (162,085)
Cash paid for product development costs (18,366) (51,516) (97,316)
----------- ----------- -----------
Net Cash (Used) by Investing Activities (452,972) (58,026) (687,348)
----------- ----------- -----------
FINANCING ACTIVITIES
Proceeds from notes payable 74,000 108,500 268,389
Repayments of notes payable (176,389) (10,000) (194,389)
Payments on capital lease (25,251) (35,772)
Borrowings on line of credit 95,542 198,944
Payments on line of credit (198,944) (1,608) (198,944)
Proceeds from debentures 152,604
Proceeds from issuance of common stock 3,460,000 397,203 3,862,203
Contributed capital - - 190,000
----------- ----------- -----------
Net Cash Provided by Financing Activities 3,133,416 589,637 4,243,035
----------- ----------- -----------
NET INCREASE IN CASH 56,350 27,369 87,924
CASH
Beginning of Period 6,475 418 -
----------- ----------- -----------
End of Period $ 62,825 $ 27,787 $ 87,924
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 15,545 $ 1,297 $ 40,387
Noncash investing and financing activities:
Assets acquired through capital lease 74,145
Conversion of debentures to common stock 152,604
Stock issued in repayment of accounts payable 2,728
Stock and warrants issued for consulting
services 711,292 888,636
Issuance of stock accrued 337,500
</TABLE>
Unaudited Interim Financial Statements
6
<PAGE>
PLANETGOOD TECHNOLOGIES, INC. AND SUBSIDIARY
(d/b/a BrowseSafe.com)
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
In the opinion of the management of PlanetGood Technologies, Inc. (the
"Company"), the accompanying unaudited consolidated financial statements contain
all adjustments (consisting of only normal, recurring adjustments) necessary to
present fairly the financial position of PlanetGood Technologies, Inc. and its
wholly owned subsidiary, BrowseSafe Technology, Inc., as of September 30, 2000,
and the results of their operations and their cash flows for the three-month and
nine-month periods ended September 30, 2000 and 1999, and for the period from
February 10, 1998 (date of inception) to September 30, 2000. The results of
operations for any interim period are not necessarily indicative of the results
for the year. These interim unaudited consolidated financial statements should
be read in conjunction with PlanetGood Technologies, Inc.'s annual consolidated
financial statements and related notes in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1999.
The unaudited consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, as well as the accounts of the
Company's predecessor, BrowseSafe LLC, which was organized on February 10, 1998.
All intercompany balances and transactions have been eliminated from the
unaudited consolidated financial statements.
Effective July 20, 2000, the Company's name was changed from
BrowseSafe.com, Inc. to PlanetGood Technologies, Inc. and the Articles of
Incorporation were amended to increase the number of authorized shares of common
stock to 85,000,000 and to authorize 15,000,000 shares of preferred stock.
Revenue recognition:
Revenue is recognized when earned. Revenue attributable to undelivered
elements, including software updates and technical support is based on the fair
value of those services and is recognized ratably on a straight-line basis over
the applicable term of the agreement.
NOTE 2 - REORGANIZATION AND SHARE EXCHANGE
In July 1998, BrowseSafe Technology, Inc., the current operating
subsidiary of the Company, was incorporated as a Nevada corporation as part of a
plan to enter into a two-step transaction (1. an Asset and Liability
Contribution Agreement and 2. a Share Exchange Agreement) with a group of
related companies (collectively the "Funding Group"). The two-step transaction
contemplated that BrowseSafe, LLC and the Funding Group would, among other
things, contribute certain monies, assets and liabilities to BrowseSafe
Technology in exchange for its common shares, and thereafter, BrowseSafe, LLC
and the Funding Group would exchange their BrowseSafe Technology shares for
common shares of Motioncast. This transaction was entered into during May and
June of 1999.
7
<PAGE>
NOTE 3 - MANAGEMENT'S PLANS AND ISSUES AFFECTING LIQUIDITY
The unaudited consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has a
limited operating history and has sustained losses since inception. The Company
experienced negative cash flow from operations aggregating approximately
$2,624,000 for the nine-month period ended September 30, 2000. As a result, the
Company has had to rely principally on private equity funding to continue its
activities.
On March 14, 2000, the Company entered into an Investment Agreement
with Swartz Private Equity, LLC for the sale of up to $30 million of common
stock upon the exercise of certain put rights (the "Put Rights"). The Put Rights
become available upon the effectiveness of a registration statement to be filed
with the Securities and Exchange Commission to register the stock that will be
sold under the Agreement, which expires after three years. The Company intends
to file the Registration Statement on the appropriate form with the Security and
Exchange Commission. Regardless of when the Registration Statement becomes
effective and the Company becomes entitled to exercise its Put Rights, the
Company will need additional cash to continue to fund its operations. The
Company currently is in discussions with several third parties with respect to
obtaining equity or debt financing. The Company will not be able to continue
operations without obtaining such interim financing.
NOTE 4 - LEGAL PROCEEDINGS
On or about April 14, 2000, the Funding Group (see Note 2) filed a
lawsuit against the Company, our President and Chief Executive Officer and our
Chief Financial Officer in the Federal District Court for the State of Nevada
alleging, among other things, that the investor group is entitled to general
damages in a sum in excess of $10,000,000, punitive damages in a sum in excess
of $10,000,000 and title to 2,738,000 shares of common stock of the Company. The
lawsuit also alleges certain inaccuracies in the Company's SEC filings.
Because the Company believed the Funding Group failed to comply with is
contribution obligations under the Asset and Liability Contribution Agreement
and the Share Exchange Agreement, it issued the 2,738,000 common shares into
escrow but did not deliver them to the Funding Group. In a letter dated November
19, 1999, the Company advised all members of the Funding Group that the Company
believed they were in breach of the agreements and asked them to remedy the
breaches. The Company is currently in litigation with the Funding Group over
these transactions. The Company believes it has meritorious defenses and is
vigorously defending the lawsuit.
NOTE 5 - INVESTMENT AGREEMENT
On March 14, 2000, the Company entered into an Investment Agreement with
Swartz Private Equity, LLC to raise up to $30 million during a three-year period
through a series of private sales of its common shares to Swartz, who, in turn,
intends to sell those shares in the public market or in privately negotiated
transactions. The dollar amount of each sale is limited by the common shares
trading volume, and certain other factors. Also, the Company may not
8
<PAGE>
sell more than $2,000,000 to Swartz at any one time, and a minimum amount of
time must occur between sales.
The Company also agreed to pay a finders fee of 4% fee for this
transaction. The finder was issued 360,000 shares of the Company's common stock
for this transaction and may be paid up to $30,000 in cash. The cash will be
paid, as the Put Rights are exercisable. The Company will record as a reduction
of the equity proceeds, the cash paid and the value of the stock based on the
quoted market value.
NOTE 6 - OTHER
In February 2000, the Company entered into an agreement with
GenesisTank.com, formerly known as California Applied Research, Inc., under
which GenesisTank agreed to buy 6,000,000 shares of the Company's common stock.
The purchase price of the stock was $.50 per share payable $500,000 upon
execution of the agreement, $1,000,000 on or before February 29, 2000, and
$1,500,000 on or before March 31, 2000. All amounts have been paid to the
Company. In connection with the GenesisTank financing, the Company issued a
finders fee of 36,000 shares of the Company's common stock and $30,000. The
Company estimated the value of the stock to be approximately $160,000.
In addition, the Company issued a five-year warrant to an individual
for his services in arranging this financing. The warrant provides for the
purchase of up to 550,000 shares of the Company's common stock at the lower of
$.50 per share or the lowest reset price (the terms of the warrant provide that
the purchase price will be reset every six months).
In March 2000, the Company entered into an amended and restated investor
relations agreement for business advisory services with an individual in
exchange for 50,000 shares of the Company's common stock. The individual was
fully vested in the stock as of the date of the contract. At September 30, 2000,
$225,000 is included in non-cash services representing the value of the stock
based on the quoted market price on the date the stock was earned.
In March 2000, the Company also agreed to a contract with an
organization and its principal owner to provide financing and advisory services.
The Company agreed to issue up to 450,000 shares of its common stock if the
quoted market price met certain levels at March 31, 2000. The performance
measurements pursuant to this contract were achieved, and the stock was issued.
At September 30, 2000, $2,025,000 is included in non-cash consulting services,
representing the value of the stock based on the quoted market price on the date
the stock was earned.
In March 2000, the Company entered into a contract with an organization
for advisory services. The contract requires a monthly fee of $10,000, issuance
of 275,000 shares of the Company's common stock and a warrant to purchase
300,000 shares of the Company's common stock at prices ranging from $5 to $15
per share. The organization is fully vested in the stock. The Company has valued
the stock at $1,135,000 based on its quoted market price on the contract date
and has valued the warrants at $935,000 using the Black-Scholes method. The
amounts will be expensed over the term of the agreement, which has now been
concluded as of September 30, 2000, the agreement has been completed and fully
expensed.
9
<PAGE>
In May 2000, the Company entered into a six-month agreement with an
organization to develop, implement and maintain an on-going market awareness
program. The Company issued 200,000 shares of the Company's common stock as
compensation for this agreement. The organization is fully vested in the stock
as of the contract date. The Company has valued the stock at $375,000 based on
its quoted market price on the contract date. At September 30, 2000, $125,000 is
included in prepaid consulting fees.
In May 2000, the Company entered into a business development agreement
with two individuals to provide business contacts and business structure
consulting. The Company issued 100,000 shares of the Company's common stock as
compensation for this agreement. The individuals are fully vested in the stock
as of the contract date. The Company valued the stock at $187,500 based on its
quoted market price on the contract date. At September 30, 2000, $80,357 is
included in prepaid consulting fees.
In June 2000, the Company entered into a six-month agreement with a
firm to provide marketing programs, custom database management, e-marketing and
a corporate due diligence site. The agreement required the Company to issue
56,000 shares of its common stock as compensation. The firm is fully vested in
the stock as of the contract date. The Company valued the stock at $95,000 based
on the value of services stated in the agreement. At June 30, 2000, the Company
had issued 35,000 shares to the consulting firm. The remaining shares were
issued to the firm in July of 2000. At September 30, 2000, $31,667 is included
in prepaid consulting fees.
In June 2000, the Company issued a warrant to a European market
awareness firm. The warrant provides for the purchase of up to 2,500,000 shares
of the Company's common shares for $2 per share on or before October 1, 2000.
In July 2000, the Company issued a warrant to purchase 150,000 common
shares to a company affiliated with Swartz Private Equity, LLC for arranging the
financing with the European market awareness firm. The exercise price for the
warrant is $2.00 per share, subject to revision every six months, and the term
of the warrant is for a period of five years.
In September 2000, the Company entered into an agreement with an
individual to provide strategic business planning services. The Company issued
350,000 shares of the Company's common stock as compensation for this agreement.
The consultant is fully vested in the stock as of the contract date. The Company
valued the stock at $710,850 based on the value of services stated in the
agreement. At September 30, 2000, $651,513 is included in prepaid consulting
fees.
In October 2000, the Company entered into a one-year agreement with a
firm to provide investor relations services. The Company is required to issue
50,000 shares of the Company's common stock as compensation. The consultant is
fully vested in 20,000 shares as of the contract date and becomes fully vested
in the remaining shares 120 days after the contract date. The Company is also
required to issue a warrant to the consultant to purchase 150,000 shares of the
Company's common stock. The consultant is fully vested in 50,000 shares of the
warrant at the contract date and becomes vested in the other portions of the
warrant based on the market performance of the Company's stock.
In September 2000, the Company entered into a four-year term note with
a bank. The note, due October 2004, requires monthly payments of $1,877,
including interest computed at 10.0%. The note is secured by assets of the
Company.
NOTE 7 - PREPAID CONSULTING EXPENSES
10
<PAGE>
As described in Note 6, the Company has entered into consulting and
advisory contracts with various third party firms and consultants. The $888,636
of prepaid consulting expenses at September 30, 2000, represents the value of
stock exchanged for these services. The contracts expire at various times
through September 2001. These fees are being expensed over the terms of the
agreements.
Forward Looking Statement
This Report on Form 10-QSB includes "forward looking" statements that
reflect our current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties, including specifically the absence of significant revenues, a
history of losses, no assurance that we can review sites accurately and on a
timely basis due to the explosive growth of the Internet, significant
competition, the uncertainty of protecting our intellectual property,
uncertainty as to indemnification risks, possible adverse effects of those other
risks and uncertainties discussed herein, that could cause actual results to
differ materially from historical results or those anticipated. In this report,
the words "anticipates," "believes," "expects," "intends," "future" and similar
expressions identify certain of the forward-looking statements. Readers are
cautioned not to place undue reliance on the forward-looking statements
contained herein, which speak only as of the date hereof. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof. All subsequent written
and oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by this section.
Item 2. Management's Discussion and Analysis or Plan of Operation
PlanetGood Technologies, Inc. (the "Company" or "we") is a development
stage company that has begun to generate revenues. Our current cash reserves
will be sufficient to fund operations at our current levels through November
2000 and we are currently seeking additional capital through an investment
capital company and other sources.
We incurred a net loss of $9,218,056 from February 10, 1998 (date of
inception) through September 30, 2000 due to expenses related to the formation
and operation of the Company, continuing costs of raising capital, normal
expenses of operating over an extended period of time, funds applied to research
and development, product development and development of our Web site.
In September 2000, PlanetGood entered into a stock sale transaction
with Doral Euroinvest, a Panamanian Corporation, which provided for an
investment of 300,000 shares of the Company's common stock at the price of $1.00
per share. The proceeds from the sale of stock went towards marketing agreement
and operations.
After numerous delays from outside suppliers, during the third quarter
the Company was able to begin realizing revenues from the sales of its product.
11
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Comparison of September 30 fiscal periods
In the third quarter of 2000, the Company collected revenues of
$46,000. These revenues are the first quarterly revenues that the company has
been able to realize. We expect revenues to increase in the future as we
continue the initial stages of product rollout.
Total expenses increased from $392,238 and $702,196 for the three
months and nine months ended September 30, 1999 to $2,668,527 and $7,510,556 for
the same period in 2000. The increase in expenses relates to increased payroll,
financing activities and professional fees in 2000, including $4,977,058 of
noncash consulting services exchanged for stock and warrants. We expect general
and administrative expenses to increase in the future as we complete development
of our products, prepare for market launch and begin to support our products. We
will also begin to incur additional sales and marketing expenses.
Research and development costs increased from $35,188 for the three
months and nine months ended September 30, 1999 to $161,603 and $266,753 for the
three months and the nine months ended September 30, 2000. The increase was
primarily related to the increase in the number of site reviewers and
programmers we utilize to build the necessary infrastructure to support
potential future growth. We expect R&D spending to remain steady, yet will scale
up in proportion to new customers signing up for our product.
Interest expense of $3,936 and $15,888 for the three months and the
nine months ended September 30, 2000 increased over interest expense of $1,835
and $9,429 for the three months and the nine months ended September 30, 1999.
The increase was caused by a capital lease entered into in late 1999, increased
activity on bank debt, which was repaid in February 2000 and new term debt
entered into in September 2000.
For the three-month period ended September 30, 2000, we had a loss of
$2,622,080 as compared to a loss of $392,238 for the same period in 1999. This
increase was a result of higher general and administrative expenses (including
an increase in payroll and payroll-related costs) and non-cash consulting
expenses of $1,493,189.
For the nine-month period ended September 30, 2000, we had a loss of
$7,462,331 as compared to a loss of $702,196 for the same period in 1999. This
increase was a result of higher general and administrative expenses (including
an increase in payroll and payroll related costs), interest expense and non-cash
consulting expenses of $4,977,058.
As of September 30, 2000, we had obtained equity and debt financing of
approximately $4,746,000 since our inception, and we had invested approximately
$470,000 in equipment. We have also invested approximately $162,000 in
capitalized software developed for internal use and approximately $97,000 in
capitalized product development costs.
Our short and long term capital requirements will depend upon many
factors, including the ability to continue to obtain adequate funding, the rate
of market acceptance of our products, the level of resources required to expand
our marketing and sales organization and other factors, some of which may be
beyond our control. A slower than expected rate of acceptance of our products
and services or lower than expected revenues generated from the sale of our
products and services and other costs associated with upgrading our equipment
would materially adversely affect our liquidity.
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Investor Relations Team
With our Investor Relations Specialists we will be forging strategic
alliances with Brokers, Key Investors, Money Managers and Mutual Funds who
command the attention of the financial industry and effect movement. We have
enlisted the help of professional organizations that bring a history of trust,
reliability and results, to enlighten the market and bring support.
Corporate Development
The Company has enlisted the help of seasoned business professionals
to assist with corporate development. These professionals are responsible for
assisting the company in finding and cultivating those companies who have
products and services that have synergy with the PlanetGood products and the
Company.
The Company is in the early stages of launching its marketing and
business development plans that have been developed to have "PlanetGood
Everywhere". This will be done through a very defined and cohesive 4 pronged
approach. These distinct channels of distribution include VAR channels - which
is made up of on-line marketing deals that will deliver PlanetGood to thousands
of web sites for resale. The second channel is Private Label ISP using the
Companies infrastructure agreements and PlanetGood - Several opportunities
are just beginning to roll out. The third and fourth channels are OEM
Distribution and Retail Outlets.
Additional Capital Requirements
We believe our current cash reserves will be sufficient to fund
operations at our current levels through November 2000. We will need to obtain
additional short term financing prior to our ability to obtain funds under the
Investment Agreement with Swartz. However, we have no written commitment for
additional financing with any party, and there is no assurance that we can
obtain additional financing in amounts and on terms that are satisfactory to us.
If we are not able to obtain additional financing in the near future, we will
have to curtail sharply our operations and, ultimately cease all activities.
Based on our history of operating expenditures and our current plans,
we anticipate our cash requirements for the next 12 months will need to come
primarily from (i) interim equity or debt financing and (ii) the proceeds of the
Investment Agreement with Swartz. As previously mentioned, our ability to obtain
funds under the Investment Agreement is subject to certain conditions, including
the volume of trading in our common shares. Based on the current volume of
trading in our common shares, we will not be able to utilize the Investment
Agreement with Swartz to obtain sufficient funds to continue operations on an
ongoing basis.
We anticipate that our future cash requirements may be partially
fulfilled by sales of our products and services and/or debt or equity financing.
However, we only recently began actively marketing our products and services
and, to date, have received limited revenues from such marketing efforts. There
can be no assurance that any future funds will be generated from operations or
from other potential sources.
The Independent Auditors' Report dated March 10, 2000, and prepared by
Katz Sapper & Miller, LLP, contains an explanatory paragraph regarding our
ability to continue as a going concern. If the proceeds from the GenesisTank
financing, together with any interim equity or debt financing that we are
currently seeking, are not sufficient to fund our working capital needs
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through the date that cash proceeds become available under the Swartz Investment
Agreement, there is substantial doubt about our ability to continue as a going
concern.
Employees
Over the next 12 months, we expect to staff according to the needs of
the business. In addition, a substantial number of part-time employees may be
hired to support the Web content review process, which is scaled to customer
growth.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently in litigation, a description of which was
provided under Item 1 of the Company's Quarterly Report on Form 10-QSB for the
period ended March 31, 2000.
Item 2. Change in Securities.
(c) Sales of Unregistered Securities.
The descriptions included in Note 6 of the Notes to Consolidated
Financial Statements of sales made in July and September 2000 are
incorporated herein by reference.
During the quarter ended September 30, 2000, the Company made sales
of securities in reliance upon exemptions from registration under the Securities
Act of 1933 (the "Securities Act"). All sales were made in reliance upon the
exemption provided by Section 4(2) of the Securities Act.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Consulting Agreement, dated September 11, 2000, between
Jake Canceli and BrowseSafe.com, Inc. This document is
incorporated by reference to Exhibit 10 to the
Registrant's Registration Statement on Form S-8 (File
No. 333-46596) filed on September 26, 2000.
27 Financial Data Schedule (September 30, 2000)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended September
30, 2000.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PLANETGOOD TECHNOLOGIES, INC.
Date: November 14, 2000 By /s/ Mark W. Smith
-------------------------------------
Mark W. Smith,
Chief Executive Officer
Date: November 14, 2000 By /s/ Gregory P. Urbanski
-------------------------------------
Gregory P. Urbanski,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
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